Little RICO: Federal case starts

It's been used to prosecute the Gambino organized crime family, Adelphia Cable's Rigas family, even the Hell's Angels. Today in U.S. District Court, the Racketeer Influenced and Corrupt Organizations Act was the basis for a civil suit against a Greene County homeowners association, and testimony included the glimpse of a gun at a subdivision property owners meeting.

Dogwood Valley residents Douglas Dye, pictured left, Mitch Miller and Grant Colby made a federal case of disputes with the Dogwood Valley Citizens Association, claiming that its board of directors inflicted "extortionate" collection methods without legal authority, subjected residents to threats of losing their property, and damaged their reputations and credit-worthiness, according to Joseph D'Erasmo, the plaintiffs' attorney, in his opening statement. The motive? Profit and an alleged attempt to force residents to bend to the association's will, says D'Erasmo.

Defense attorney John Loehr countered that the defendants–- who include Stanardsville Mayor/association president Gary Lowe, construction company owner/treasurer Matt Brown, Dean Musser, Judy McDavid, and Keith Wynn–- all own one lot in Dogwood Valley except for McDavid, who owns two, so profit could hardly be the motive. He pointed out that of 320 lots in the neighborhood, only 15 had been foreclosed since 1998– less than 10 percent of the neighborhood.

Two of those properties, owing $35 each in special assessments, were sold at auction in 1998 and one was picked up by Lowe for $1,000. Their owner, William Winkelman, took the case to the Supreme Court of Virginia, which ruled in 2004 that the Dogwood Valley Citizens Association was not a homeowners association that could levy special assessments under Virginia law and revoked the sale.

Lowe is the only defendant who owned a foreclosed property, said Loehr. "This is a totally frivolous lawsuit," he said, questioning whether it was a RICO enterprise for what amounted to the association getting "a couple of loads of gravel."

Plaintiff Douglas Dye went to court against the association in 1984, protesting fees that resulted in liens for $875 placed on his property, and the Greene County General District Court ruled that the association failed to show it "had the right to collect such fees," he testified.

Dye paid no further road fees, and in 1998 he discovered a public notice in the Greene County Record that his lots were to be sold at public auction in three days. He paid the fees "under duress," he said, but discovered when refinancing his home in 2005 that the original liens had never been removed.

He also noted that in reviewing the association's records, he discovered it had paid $159,000 in legal fees to the law firm of its attorney, George Dygert.

Plaintiff Mitch Miller testified to a problem paying in cash $70 in assessments he owed on lots he owned with his mother. "I had concerns that checks were not being properly credited and liens were being filed," he said. "It was important for me to pay in cash with witnesses for verification."

At a Dogwood Valley Citizens Association meeting, Jack O'Leary was there to videotape the meeting "at the direction of George Dygert," said Miller. He said Lowe refused to take his money, and Miller put the payment on a railing at Lowe's elbow. After the meeting, O'Leary told Miller to take his money back, and when Miller declined, "He opened his jacket and said if I didn't take it, I would be made to pay," said Miller, who then described seeing a small revolver inside O'Leary's jacket.

Miller said that despite paying a 2002 assessment, in 2003 he received a letter saying he owed $206, and his brother wrote a check to the association, which was returned in June 2003. A lien was placed on his property for road assessments and special assessments, and Miller took the warrant in debt to the Supreme Court of Virginia, which ruled in 2006 that the Dogwood Valley Citizens Association still could not make special assessments on property owners.

To fight what started as a $206 road assessment, Miller claimed it cost him $25,000 in legal fees to go the the state's highest court.

Plaintiff number three, Grant Colby, also read in the paper that the property he bought in 1993 was going to public auction in 1998. "I paid the special assessment three times," said Grant. His money order for $245.72 kept being sent back by an attorney in Dygert's firm because it didn't include interest, attorney's fees, and the cost of the newspaper ad, he said.

On auction day, "I attended the sale and advised people if they bought my land, they'd be behind first lienholder Crestar Mortgage and have to wait 20 years," said Colby.

He testified that a letter from Dygert's firm went to Crestar notifying it of a public sale of Colby's lot, and on November 5, 1998, he received a letter from Crestar informing him that it had paid $545 in Greene County taxes. "I had no unpaid taxes because they're paid through an escrow account," said Colby. "Money was coming from my first mortgage to pay a private, imagined debt."

Ultimately, that payment cost Crestar $3,000 plus attorney's fees, said Colby, but that wasn't the last of the special assessments he got from the homeowners association. In March 2005, another Dygert letter informed him he was late on $70 special assessment and interest. Aware of the 2004 Winkelman case, Colby refused to pay and that earned him a lien on his house, which was removed in 2006 after the second Virginia Supreme Court case.

The RICO case is scheduled for four days, and the plaintiffs have 25 witnesses on their list. Judge Norman Moon at times seemed impatient with the length of the trial, and at times chastised both attorneys to move it along. "Do you want to be here for six months to try this case?" he asked Loehr after an objection.

16 comments

Brigitte Powell June 25th, 2008 | 4:03pm

Wow, brings back memories. I thought Greene County was all grown up. A few making giving Greene County a bad mark.
This definitely bears watching for those who are in HOA situations. Which means all of those who are living with a Home Owners Situation ought to get involved and participate.

Cville Eye June 25th, 2008 | 9:57pm

I hope the Hook will keep us informed of this fascinating story.

Steve June 26th, 2008 | 3:40pm

Maybe the state should put an end all HOAs

Brigitte Powell June 26th, 2008 | 6:50pm

Well, you may have a point, but there seemes to be no other way to keep someone else from moving in next to you and then letting their place "go to the dogs" so to speak (without going into much detail). No one wants to move next to someone who isn't taking pride in home ownership by keeping the outside of their home neat and clean. Sure would be nice if someone came in with a good idea....without involving "uncle sam". :-)

Steve Miller July 2nd, 2008 | 9:39pm

I guess I am really responding more to Brigitte than I am the article posted.

First you have to understand what you are talking about first.

1. When the HOA doesn't allow a large percentage of it's members to vote or won't allow oversight of a vote taken how does one "become involved" in the process?

2. When the "Current Board of directors" of an association refuses to even hold it's annual meeting to enable the general membership to have an opportunity to vote for a new legitimate board for more than 3 years, how does one "become involved" in the process?

3. When the "Current Board of directors" of an association refuses to follow a single ruling of the District, Circuit or Supreme Court of Virginia, how does one "become involved" in the process?

4. When there are 13 miles of roads in an association and the only roads that see any maintenance is less than one mile of roads that services the properties of the current or some of the former board of directors and the rest are left to deteriorate. When a couple of property owners purchase equipment and material and provide their own time free of charge to maintain the roads into and out of their own property (benefiting all the other property owners using that road) and the association sues to stop that free service, I have to ask you how does one "become involved" in the process?

5. What would you do if you have no control at all over the actions of the BOD and it is the members of the Board who are trashing up your neighborhood?

Steve Miller July 2nd, 2008 | 9:49pm

I also need to make a correction to the article.

"Two of those properties, owing $35 each in special assessments, were sold at auction in 1998 and one was picked up by Lowe for $1,000. Their owner, William Winkelman,"

A correction to this is that each of these lots sold for $500 each, less than 10% of their actual "tax" value at the time. Both of the Winkelman lots were directly connected to Hidden lake which made their resale value at the time much higher that the "tax" value listed.

Steve, I checked with Greene County Circuit Court Clerk Marie Durrer. She says records show Lowe paid $1,000 for the Winkelman lot.

Thanks for reading.
Lisa Provence

Brigitte Powell July 3rd, 2008 | 4:28pm

I absolutely agree with Steve. And I do know what I'm talking about. It's a few trying to control the masses. But remember, as in Real Estate, it's buyer beware. So if you have questions and get "put off" keep asking in writing and then talk to other owners. Sometimes it's surprising what you find.

Steve Miller July 4th, 2008 | 7:46am

Lisa,

I stand corrected, I may have confused the selling price of the Winkelman's lots with those of Harter and others.

armchair quarterbacks July 6th, 2008 | 2:41pm

I hope you guys realize that Steve Miller is one of the peole bringing this rico case to federal court in the first place. That means he is more than slightly biased.

Brigitte Powell July 7th, 2008 | 7:56am

Where are the bylaws and what do they say? They can be accessed by the public....or the owners can ask to get a package from the HOA for a fee (fees vary)

Teresa July 8th, 2008 | 2:23pm

How can Greene County put Gary Lowe in even as the substitute Mayor of Greene County knowing that he is accused of these illegal activities? I don't get it.

armchair quarterbacks July 8th, 2008 | 5:51pm

Mayor of stanardsville not greene county. Also nobody else wanted the job. It's a figure head with no power.

Steve Miller July 10th, 2008 | 11:16am

ArmChair,

While I have been wrongly accused and falsely arrested many times by the DVCA thugs, I am not and never have been a Plaintiff in the RICO case, although I am currently considering bringing forward a RICO case against some of the same individuals and other past board members in the near future. I am currently still fighting them in State court.

KK July 17th, 2008 | 9:39am

FYI - my parents had their property taken by DVCA for non payment of road fees. They had owned their property since the 70's and for the majority of that time, we never had road access to our property because it was so overgrown with weeds (dispite faithfully paying the road fees). My dad and brothers had to get their machetties out to hack their way down the road. My parents tried to discuss this with the board and every time, they were told that if they sent their payment in, the roads would be fixed. It never was, and by the time the special assessment rolled around my parents were tired and fed up.

What amazes me is that every time the board and their attorney needed more money, they knew the correct address to send the bills to, but suddenly when it came to the notice of foreclosure they had the wrong zip code on the correspondence. Consequently, the first my parents knew about the foreclosure was when a neighbor looked them up in the phone book and gave them a call.

By this point, my parents had already paid years of road fees (for no vehicular access to their property), special assessments and attorney fees and they saw no point in throwing good money after bad and trying to save the property, except for a letter to the clerk of court explaining their situation.

Some of you might say my parents should have just paid the fees, but think about it. DVCA had as much right to levy fees and attorney fees as any joe-blow walking down the street (that's what the courts have ruled). So why should you have to hire an attorney because I send you a letter demanding that you pay me $xx or I will foreclose on your property. Its amoral and just plain crazy.

Tom August 1st, 2008 | 10:42am

I have been following the Greene County case with a great deal of interest. I do not own property at DVCA , but a worthless membership lot (lots w/o water & sewer) at the Lake Holiday HOA in Cross Junction, VA. Hundreds of property owners like myself have been waiting for utility service to our membership lots for over 30 years! We pay but nothing ever happens to our lots and you can't even get to most membership lots. The lot is worthless without the utility service and 800 plus membership lot owners are trapped into paying high dues to support the lifestyle of the 600 homeowners. The HOA established a $2000 transfer so there's nobody that wants to buy it and take on the responsibility of a high monthly dues bill. Sadly, the homeowner controlled Association collected millions in dues from owners like me despite being told from Association lawyers that there was no collection authority in the deeds. The Lake Holiday HOA even foreclosed owners and ruined so many lives over the years. Basically, I am trapped into paying and paying.

From reading some of the posts DVCA and Lake Holiday have similar problems, and I really hope that the Directors of the DVCA lose in the RICO case. A lose for the DVCA Directors would send a message to HOA Directors across Virginia to stop such bad behavior to their neighbors. Maybe it would also send a wake call to the look the other way Court system that's reluctant to get involved with HOA disputes. Runaway HOA directors need to be held accountable for their wrongdoing, and I hope and pray that RICO comes to Lake Holiday.